Small Scale Enterprise and Poverty Reduction

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CHAPTER ONE

INTRODUCTION

Background to the study
It is estimated that one-fifth of the World’s population currently lives on less than a dollar a day (Annan, 2001). It is also estimated that around one-third of the people living in developing countries continue to live in ‘income poverty’ by earning less than one US dollar per day. This affects children and so nearly 12 million children die each year before their fifth birthday. This brings in the issue of human capabilities such as being illiterate, unhealthy and inadequately nourished. For instance a UNDP (1998) report shows that 30 per cent of all children under five years are malnourished and 38 per cent of all adult women are illiterate in developing countries. We are living in a world where of the world's 6 billion people, 2.8 billion – almost half of world’s population – earning less than $2 a day and 1.3 billion – about fifth of the world’s population – live on less than a $1 a day in extreme poverty (Bradshaw, 2005). To be poor is to be hungry, to lack shelter and clothing, to be sick and not cared for, to be illiterate and not schooled. But for poor people, living in poverty is more than this. Poor people live without fundamental freedoms of action and choice that the better-off take for granted. They often lack adequate food and shelter, education and health, deprivations that keep them from leading the kind of life that everyone values. They also face extreme vulnerability to ill health, economic dislocation, and natural disasters. And they are often exposed to ill treatment by institutions of the state and society and are powerless to influence key decisions affecting their lives. Some progress has been achieved over the last 40 years regarding life expectancy and health, education, infant mortality, and clean water, but the figures given above show that a lot more work needs to be done (Bradshaw, 2005). In 2000/01, the issue of the vulnerability of the poor stimulated another stress for governance and institutions. As a result, the World Bank promoted three ways to tackle poverty: opportunity, empowerment and security (World Bank, 2001a). Despite the above strategies, poverty is still the world’s greatest challenge. In 1998, for example, of the world’s 6 billion people, 2.8 billion lived on less than $2 a day, and 1.2 billion lived on less than $1 a day. Of that 1.2 billion, South Asia, Sub-Saharan Africa, East Asia and the Pacific accounted for 44 per cent, 24 per cent and 23 per cent of this total, respectively (World Bank, 2001a). In the next 25 years, according to the World Bank (2001a), the world’s population will roughly increase by an additional 2 billion. About 97 per cent of this increase will be in developing countries. This population increase encourages concern for the world, as it will result in problems of environmental degradation, unemployment, poverty and other social and political problems. In East Asia the number of people living on less than $1 a day fell from around 420 million to around 280 million between 1987 and 1998 - even after the setbacks of the financial crisis. Yet in Latin America, South Asia, and sub-Saharan Africa the numbers of poor people have been rising. And in the countries of Europe and Central Asia in transition to market economies, the number of people living on less than $1 a day increased to more than twenty fold (World Bank, 2000). There have also been major advances and serious setbacks in crucial non-income measures of poverty. The varying infant mortality rates across the world Sub-Saharan Africa’s is 15 times that of high-income countries give an idea of this widely differing experience (World Bank, 2000). Despite spirited efforts to reduce poverty in urban sub-Sahara Africa (USSA), a high degree of absolute urban poverty still persists in these areas. Poverty in these areas manifests itself as rampant and high unemployment; hunger; decayed, unventilated, unplanned and shapeless dwellings; prostitution;...
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